1986
DOI: 10.1016/0165-1765(86)90110-2
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A new class of sufficient conditions for the first-order approach to the principal-agent problem

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Cited by 7 publications
(5 citation statements)
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“…Absent of this restriction, the rather stringent additional requirement that the ratio f l (x, l)/f (x, l) is increasing in x-the so-called 'monotone likelihood ratio property'-is needed to ensure that the optimal payment to the worker is increasing in output. More generally, Brown et al (1986) show the secondorder sufficiency condition is satisfied if the worker's objective function is pseudoconcave in its arguments. Convexity of the distribution function plus the monotone likelihood ratio property is one way to ensure pseudoconcavity, but not the only one.…”
Section: Appendix: Proof Of Propositionmentioning
confidence: 98%
“…Absent of this restriction, the rather stringent additional requirement that the ratio f l (x, l)/f (x, l) is increasing in x-the so-called 'monotone likelihood ratio property'-is needed to ensure that the optimal payment to the worker is increasing in output. More generally, Brown et al (1986) show the secondorder sufficiency condition is satisfied if the worker's objective function is pseudoconcave in its arguments. Convexity of the distribution function plus the monotone likelihood ratio property is one way to ensure pseudoconcavity, but not the only one.…”
Section: Appendix: Proof Of Propositionmentioning
confidence: 98%
“…The Jewitt (1988) approach could also be used here. It would also be interesting to extend the approach in Brown et al (1986), building on increasing marginal cost of effort and nonseparabilities between effort and income.…”
Section: Local Conditions Sufficient For Nisp and Cispmentioning
confidence: 99%
“…Thus, if c(·) is concave, then c −1 (·) is convex, which can alter the production technology in ways that overturn some of the conditions below. SeeBrown, Chiang, Ghosh, and Wolfstetter (1986) on the importance of the curvature of c(a).…”
mentioning
confidence: 99%
“… Brown et al () provide some limiting curvature and complementarity conditions on the agent's utility for wage and effort (not necessarily additively separable). Simultaneous work by Jung and Kim () also looks at the curvature of c , but follows a different approach, which relies on a double‐crossing property between the agent's utility for income and disutility of effort.…”
mentioning
confidence: 99%